7 myths about HUD-approved counseling busted

Candy Brown, of Oak Park, was desperate for mortgage help at a recent event to help homeowners avert foreclosure. Brown faces foreclosure because of high medical bills and an unofficial separation from her husband.
— Nelvin C. Cepeda

Candy Brown, of Oak Park, was desperate for mortgage help at a recent event to help homeowners avert foreclosure. Brown faces foreclosure because of high medical bills and an unofficial separation from her husband.
— Nelvin C. Cepeda

Myth 3: If I pay hundreds of dollars for services to fight foreclosure, then I’ll get hundreds-of-dollars worth of quality help.

Fact 3: Companies that guarantee you a loan modification or foreclosure services if you pay them up-front are scams. They’re also illegal in California.

Roughly three in four people who come to the Housing Opportunities Collaborative for help have been at least approached by schemers who provide false hopes, from cleaning up your credit to helping you qualify for government programs, said Pajanor, with Housing Opportunities Collaborative.

Fact 4: They do much more. Most of the people who receive help need help figuring out whether their home is worth keeping. Some simply want advice in situations that include divorce.

How it usually works: A struggling homeowner calls one of these agencies and is interviewed to determine if face-to-face counseling is needed. If that’s the case, then the homeowner would come in and go through a more thorough questioning that covers finances and desired goals. Counselors then give their recommendations on proposed next steps.

The length of time of counseling process varies by case. “We make sure the homeowners are informed, so that if they lose their homes, they’re prepared,” Pajanor said. Homeowners also can get help at free foreclosure clinics that happen across the county. Important to note: Home counselors who are certified by HUD cannot operate on their own; they must work for an agency that’s also given HUD’s approval.

Myth 5: Once a sit-down is secured, I can let the counselor handle everything.

Fact 5: They can’t do everything and need your constant participation. HUD-approved housing agencies have small staffs and limited funding from the U.S. government. That’s why local agencies rely heavily on volunteers, from pro bono attorneys to real estate professionals.

Myth 6: I should only turn to HUD-approved counseling if I’m facing foreclosure.

Fact 6: You don’t need a hardship. Homeowners can be evaluated to see if they’re eligible for government programs, such as the Home Affordable Refinance Program, which reduces monthly mortgage payments even for borrowers who are underwater on their loans. Another popular program is Keep Your Home California, which helps homeowners catch up on mortgage payments, relocate after a short sale, or cut their principals.

Myth 7: Going to a counselor should be a last resort.

Myth 7: It should be a struggling homeowner’s first step, counselors say. Many times, borrowers come for help when it’s too late, or almost too late. “Normally, we see clients who already haven’t been paying (their mortgage) for a year,” said Espejo, with the Housing Opportunities Collaborative.